Zone Telecom, ANPI Agree to Merge

By Khali Henderson

Reseller Zone Telecom Inc., Cherry Hill, N.J., and wholesale provider Associated Network Partners Inc., Springfield, Ill., announced late Wednesday they have signed a definitive agreement to merge. The transaction will bring together two privately held businesses, which had combined annual sales of approximately $180 million in 2009.

Pending shareholder, federal and state regulatory approvals, the deal is expected to close by the end of the year.

Under terms of the agreement, both companies will contribute 100 percent of their shares and assets to a new holding company, ANZ Communications LLC. ANPI and Zone Telecom will each own 50 percent of the new entity, and will continue providing service under both current business names.

Dave Lewis, president and CEO of ANPI, will become CEO of the new company. Dan Boynton, CEO and president of Zone Telecom, will continue as president of the new company.

The deal combines Zone Telecoms multicarrier voice, data and VoIP services for enterprise and wholesale customers with ANPIs network assets and wholesale customer base. The merged organization will serve 1,300 enterprise and nearly 800 wholesale customers.

Zone and ANPI have both been active in the wholesale segment, while Zone has also been a leader in providing enterprise services,” said Zone Telecoms CFO Eamon Egan. This transaction will bring scale, but will also bring cross-pollination of products and capabilities between those two segments and enable us to expand beyond them.”

ANPI is the combination of several independent telephone companies, which in 1996 joined together to negotiate better long-distance rates for their customers. ANPI remains a long-distance aggregator, but in 2005 became a facilities-based carrier by implementing a switching network and now provides wholesale long distance, data and carrier solutions to ILECs, CLECs and mobile operators throughout the United States.

ANPI has had a major presence in the wholesale (predominantly rural ILEC) market since its founding in 1996,” said Egan. Zone had served some wholesale customers during its early years but really entered that market in a major way with its 2006 acquisition of WRLD Alliance. By combining the companies we hope to expand their capacity to serve the ILEC and wholesale markets.”

Incidentally, the two companies are wholesale customers of each others network services but share few customer in common, Egan said.

The company is evaluating changes to headcount. Between now and the closing we will undertake a full review of operations of both companies and develop a reorganization plan,” said Egan. Most job roles and positions are complementary and do not overlap. It is inevitable, however, that over the next few months we will identify some overlap and phase out some positions.”

In addition to corporate headquarters in Springfield, Ill., and network operations center in Dallas, the new company will have regional operations, sales and support offices in Los Angeles; Cherry Hill, N.J.; and Mount Pleasant, Utah.

ANPI maintains a nationwide OC192 ring with aggregation points in Chicago, Dallas, Las Vegas and Los Angeles that are used to interconnect to wholesale customers. The OC192 backbone is used to interconnect 7609 routers to form the core of the routed IP network and to provide private-line services. In addition, Sonus GSX-9000 switches in Chicago and Las Vegas are used to provide wholesale switch and tandem services. ANPI recently completed the relocation of its NOC from Springfield to Frisco, Texas.

Zone also maintains its own facilities in California and utilizes shared facilities in the Northeast. 

The new company expects to generate enough EBITDA and free cash flow to invest in new technologies and product development, expand sales and marketing efforts as well as pursue additional accretive acquisitions. 

There has been and continues to be a great deal of activity and consolidation in the telecom marketplace, and we expect accretive opportunities to present themselves as we proceed in 2011 and beyond,” Egan said. We expect to be well-positioned to consider taking advantage of such opportunities, driven by the goal of attaining increased scale or diversification or ideally both. We will remain first and foremost a telecom service provider and taking steps to expand our ability to serve our customers will remain our focus.”